The Dutch Case Social housing in the Netherlands Rudy de Jong 23 april 2010

1. The Dutch Case Social housing in the Netherlands Rudy de Jong 23 april 2010

2. Notification European Commission • Existing State Aid • Notification 2002, withdrawn 2003/04 • Letter 14 July 2005 (first step Regulation 1999 existing aid) • Doubts regarding compatibility of the Dutch system with State aid rules • Possible ‘Manifest error’ • New State Aid • Voluntary notification by Dutch government • Special Project aid 40 selected neighbourhoods • Paid with a levy on HA’s not working in these neighbourhoods

3. Existing State Aid Assessment of existing State Aid • State Aid consists mainly of a financial advantage because of state guarantees on loans and the use of a government owned bank. • The state aid values ‘only’ € 300 million a year.(i.c. which is only a small part of the lower rents offered by HA’s) • The compensation doesn’t meet the 4th Altmark criterion:‘Corporations have not been chosen in a public procurement procedure … Moreover the Dutch authorities have neither claimed nor proven that the compensation has been determined on the basis of an analysis of the costs which a typical undertaking, well-run and adequately provided with appropriate means would have incurred in discharging the public service obligations …..’(i.c. not true, the Commission didn’t accept the arguments of the Dutch Ministry of Housing. This creates the bureaucratic situation that HA’s must repay money they didn’t receive while their costs for the public purpose (low rents etc.) are much higher than their benefits!

4. Existing State Aid 2005: The Commission takes the preliminary view that: • ‘ the Netherlands should amend the public service definition of HA’s so that the social housing would be provided to … disadvantaged citizens …… and the offer of social housing should be adapted to the demand from disadvantaged citizens … ’ 2009: The Commission considers the following measures appropriate to ensure compliance with the EC State aid rules: • ‘Limitation of social housing to a clearly defined target group of disadvantaged citizens or socially less advantaged groups ….’ • ‘The offer of social housing by the HA's should be adapted to the demand from disadvantaged citizens or socially less advantaged groups.’

5. Existing State Aid Commitments made by the Dutch authorities:(i.c. ‘agreement” between the Commission and the Netherlands?) Construction and renting out of dwellings: • ‘Target group of socially disadvantaged households: individuals with an income not exceeding € 33.000. This covers 43% of the Dutch population’ • ‘Maximum rent up to € 650.’ • ’90% of the dwelling in each HAare allocated to individuals belonging to the target group at the moment of allocation. The remaining 10% will be allocated on the basis of objective criteria with element of social prioritisation …. persons in need of social assistance … have priority …’ • Restriction to the moment of allocation. However the Commission also postulates: ‘Corporations will need to anticipate the volume of their offer of social housing to the actual size of the target group in their area … This will result in reduction of excess offer of social housing ...‘ • Penalties if an individual HA doesn’t meet the demands: no access to loans (with state guarantee) for new investments and repay of excess compensation.

6. Social real estate Commitments made by the Dutch authorities: Social real estate ( ‘Public Service Buildings): • ‘’Are let out to non governmental organisations or public bodies.’ (i.c. no small starting enterprises, medical services, etc.) • ‘Only establishments that truly serve a public purpose ….’‘A quasi-exhaustive list of establishments that qualify … is reproduced as an Annex to this decision.’(i.c. the Commission must agree on the level of the tenant organisations) • ‘HA’s will be obliged to rent out these buildings to the tenants at a rent that is lower than the market rent, thereby passing the advantage received by the HA's to the social organisations operating in the buildings.‘ • Reimbursement of the aid at non-compliance.(i.c. even if the costs of the public obligation are higher than the profit)

7. Observations • EC has required MS to advance “appropriate measures” to restrict the scope of the definition of a SGEI in the area of social housing. • EC demands social housing to be targeted on disadvantaged households. Middle income groups having difficulties in accessing the housing market must be excluded from social housing. • EC fails to establish that the current national legislation has led to a manifest risk of overcompensation. EC didn’t examine at all costs and revenues of social housing providers. • SH providers risk sanctions even in a case of ‘undercompensation’

8. 3 options to deal with social/public/cooperative housing • No aid.Not-for-profit or public housing providers offer housing in competition with commercial providers. Minimal return on investment excludes low income households. • State aid.MS compensate not-for-profit and/or for-profit providers for delivering specific public services. The 4 Altmark criteria apply (no overcompensation). • SGEI.MS entrusts a public service obligation to authorized housing providers. Compensation allowed to fulfil purpose of SGEI.EC requires limited definition of target group SGEI (income ceiling).Universal services in social housing are not accepted as SGEI.EC requirements exclude middle income households.

9. … Thank you for you attention! www.cecodhas.org